The same way you pay more for gas in summer or when the economy is doing well: demand is higher so prices go up.
Don't forget that when the bubble pops companies holding the bag will be trying to recoup their initial capital so the price won't go down.
I'm not sure about that. The way I see it, there will be more supply for the below-expectation demand, which would make prices go down
They can turn off some generators and adjust the supply down for ideal revenue/profits, reduce staffing levels, and extend equipment life. There's no reason for them to charge you $50 for something once you've told them you'll pay $100 for it.
You should listen to some of the recordings of the energy traders at Enron. They did this stuff all the time.
Still nothing terribly new here. Energy has always had inelastic demand, meaning usage doesn't change much with price. Whether gas costs 1, 3, or 5 dollars people still need to get to work and will still buy stuff. Maybe people will start to combine trips or whatever with higher prices, but nothing huge.
Exactly, so there's never a reason to bring down the price. If anything you'd bring down the supply (e.g. Enron during the California energy crisis).
Ah, but you are forgetting about corporate greed and industry collusion.
Oh! Planet Money just did a really good episode on this exact topic.
It’s complicated and I recommend a full listen to the episode, but the big two reasons are:
Those two, combined with the deregulation in most markets, has meant that the price for everyone is going up.
Its supply and demand. The AI data centers are paying their electric bills, but at the same time they represent a significant increase in demand for electricity, so electric companies can raise their prices.
Yep. It's the same reason everyone has to pay more for RAM now, even though consumers didn't cause the shortage.
The AI data centers are paying their electric bills
This bears repeating. Datacenters do have to pay the light bill. Even when the VC money dries up. It's a beautiful thing.
But their rates are significantly lower then consumers
In certain periods they might have cheaper prices than regular consumers and in other periods it might be more expensive. They just have a fixed price agreement. No producer of electricity hands out free power.
The problem is that because of that, consumer prices have to rise.
And usually the company in charge of power delivery can change their rates regardless of a fixed price agreement from the power generation company.
I don't think it's all bad in the long run. A higher base load also give higher incentives to install renewable energy. In Denmark we have issues with the cannibalisation effect, i.e. We have reach a point where it's no longer financially viable to install more renewable assets. We often see negative power prices on windy and sunny days, which forces the renewable asset owners to either turn off their assets during these periods, or pay the negative spot price.
The US is very different in that regard. This will only be a detriment to the consumers, because extra capacity will be provided by fossil fuels.
But still, wouldn't renewable assets suppliers have an incentive to install assets in these areas? If the spot price is high and they can produce "free" electricity, their earnings are a lot higher than the fossil fuel plants.
Our federal government is currently hostile towards renewables, and they're sticking these data centers in states whose leadership largely aligns with the feds.
To build a new power plant, you need approvals and permits, and the fossil fuel corporations pay lots of money on astroturfing to sway public opinion, filing BS lawsuits to bleed the competition dry, or just outright bribing officials.
What you're saying makes perfect sense if you're not only planning one quarter at a time. Their goal is to maximize short term profits even if it hurts them in the long run.
Expanding on that: in competitive electricity markets, in theory, total demand is met by the cheapest plants (by "marginal price": how much does an additional unit of electricity cost?) that are available.
The marginal price of PV, wind and hydropower is pretty much zero.
The next cheapest are usually older nuclear fission plants and coal power plants.
Then is a huge gap and then come newer nuclear plants and gas fired power plants.
But all of these plants aren't built over night. So maybe before all of the datacenters, total demand may have mostly been met by renewables and coal and gas power plants only operated a few hundred hours per year. Now, total demand rises and those plants need to operate more often. That's why the prices rise just because of demand increase. Other effects (e.g. changes in regulation, corporate greed, ...) might be at play as well.
Sure, but the companies driving the increased demand should be paying for the increased capacity directly instead of having the general public subsidize it.
How would that work? With a flat fee or depending on whether ai companies are tipping the scale to a more expensive marginal price within a price period?
Colombia has price discrimination for residential areas: households in richer areas have to pay more than those in poorer areas. I don't know how good the actual implementation works out for the people there, but it was in effect when I was there more than 10 years ago and it still seems to be (see "estratos" here: https://www.enel.com.co/content/dam/enel-co/espa%C3%B1ol/personas/1-17-1/2025/pliego-tarifario-enel-diciembre-2025.pdf). If that is possible for different areas of one city, of course we could make data centers pay more for 1 kWh than a private consumer would.
It just won't happen in our hyper-capitalist north american and european countries.
I don't know how wide spread smart meters are in the US, but it should be fairly simple so have an extra tariff on these kind of consumers, or perhaps just tariffs during peak periods.
At least it could be enforced that the surplus heat from data centers had to be reused in some way, could be residental heating or ptx.
Here in Texas my rates tripled from last year. I spent more and didn't cool my house nearly as much this last summer
When there is a finite amount of something and someone with more money wants it, it makes the price of it for everyone go up to make it so that some people can no longer afford to compete for the resource, making it available for the higher spender. (Yes there's also infrastructure being built, but they will out compete us for that too)
Same thing with land & property on it, the working class can't afford to buy housing now, because rich people want to use housing as an investment vehicle.
Food is another (though also tied to land ownership)
Ultimately it's the same problem across the board and the solution is generally a wealth tax to prevent densely concentrated capital from distorting the market.
Specifically for these companies, they're simply too big. They need to be broken up and need to be prevented from getting this size again. If they truly cannot be broken up, they should be nationalised.
Failure to address these issues will result in these companies and people holding a total monopoly on all the resources available. More expensive electricity is only the beginning.
The electric companies have to build more generation and infrastructure to accommodate the huge demand from data centers. The electric companies tend to spread that cost among all customers.
This is the part where I tell you that residential electricity costs are higher to basically subsidize commercialized electricity!! This is how it's always been even without AI. Not defending it, I definitely think it's bullshit
Mine is going up 10% next year, got a letter from them. Data center coming soon even though not 1 person in town wants it.
FUCK THESE CORPORATIONS
I think it's important to input blame in to ALL responsible parties. Fuck the AI companies but "not 1 person in town wants it"? Politicians are people and if they didn't want it they could stop it or bump taxes so high it would drive them out, if they are not doing anything they are getting something out of it.
don't "dehumanize" politicians. They are not gods they are just regular people that you have power to remove.
Add their names to the list EVERY TIME. AI companies are getting away with a lot BACAUSE of politicians, bribe, lobby etc. They are responsible. Make them understand
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